The Patent Reform Act of 2011 was unanimously approved by the Senate Judiciary Committee without the testimony of a single inventor. If voted into law, it will hurt American innovation.

On Monday, February 28th, the U.S. Senate is going to vote on S. 23 – the Patent Reform Act 2011. The bill was unanimously approved by the Senate Judiciary Committee without the testimony of a single inventor. If voted into law, it will hurt American innovation.

President Obama, in his recent State of the Union speech, made innovation a priority for empowering the U.S. economy and ensuring its long-term competitiveness. The President laid out his vision as follows: “The first step in winning the future is encouraging American innovation…In America, innovation doesn't just change our lives. It's how we make a living.”

The President continued the “innovation” mantra in the speech he delivered along with his budget on February 14, stressing the need to “invest in those things that are absolutely critical to preparing our people and our Nation for the economic competition of our time… We do this by encouraging American innovation and investing in research and development.”

Yet despite the President’s newfound commitment to innovation and R&D, he is supportive of legislation that will severely discourage innovation which has been reintroduced in the Senate by Democrats as the Patent Reform Act of 2011. The President is not the only one who adopts an inconsistent position characterized by public statements supportive of innovation while advocating legislation that will have the opposite effect. Sen. Patrick Leahy (D-Vt.), the Senate Judiciary Committee Chairman and the chief proponent of the Patent Reform Act of 2011, paid lip service to the idea of encouraging innovation in his enthusiastic response to President Obama’s State of the Union address, even as he pushed for ratification of legislation that will do just the opposite.

As the founder and president of American Innovators for Patent Reform (AIPR), I was disappointed to see not only the same bad ideas that characterized previous failed patent reform proposals, but also some new ones. For example:

• New fees. The President’s budget would have the Patent Office impose a “temporary surcharge,” which “will better align application fees with processing costs.” Last year, the U.S. Patent and Trademark Office (USPTO) collected approximately $51 million in fees over and above the agency’s authorized budget for fiscal year 2010, which ended September 30, 2010. That’s money the Patent Office could have used for hiring more patent examiners. However, the Patent Office wasn’t allowed to keep all the money it generated – only the amount Congress had allocated for it in the 2010 budget. The rest went to the Treasury for use elsewhere. The use of fees collected from inventors for government needs completely unrelated to the functioning of the USPTO amounts to nothing short of a tax on innovation. If you want more innovation, taxing it more heavily is not the best approach.
• Post-grant review. Another provision in the legislation called “post-grant review” is touted as a way to evaluate the validity of a patent that is “potentially 50-100 times less expensive than patent litigation” in the White House State of the Union Fact Sheet on Patents. Yet, this provision will add more work to the already overburdened Patent Office with the likely result that patent backlog will grow even greater. More expensive than existing reexamination proceedings, post-grant review will be unaffordable for many small businesses, universities and especially independent inventors. Driving up the costs of what is already an expensive process will diminish intellectual property rights by forcing many inventors to abandon their patents.

• “First-inventor-to-file” standard. In the United States, patents have always been awarded on the “first-to-invent” basis i.e., to the first inventor. If two parties file for patents on substantially the same invention, the patent will be awarded to the one who was the first to invent so long as such inventor was diligent in reducing the invention to practice. Other countries follow the “first-to-file” system where the patent is awarded to the inventor who is first to file the patent application, regardless of who was the first to invent. As a result, inventors rush to patent offices around the world with half-baked applications, many of which ultimately translate into low quality patents. The Patent Reform Act of 2011 proposes to change the traditional American first-to-invent system, firmly rooted in the U.S. Constitution, to the inferior foreign first-to-file regime.

• Judges as Gatekeepers. In order to reduce infringement damages awards, the Patent Reform Act of 2011 proposes provisions that require judges to prevent juries from even considering slapping an infringer with a large judgment The purpose can only be to further devalue patents by decreasing legitimate damage awards.

• Raising the Bar for Proving Willful Infringement. This provision seeks to make it harder for patent owners to prove willful infringement in order to obtain treble damages. If the Patent Reform Act of 2011 makes treble damage awards highly improbable, infringers will have less of a reason to settle, thereby clogging the courts with longer litigation.

Many of the reforms undertaken recently by the USPTO under Director David Kappos have improved efficiency. Experimental programs such as the Peer Review Pilot, Accelerated Examination, the Green Technology Pilot and the Multi-Track Patent Examination proposal indicate that the Patent Office is streamlining its processes and issuing higher quality patents. The goal of future reforms should be the continuation of encouraging innovation by making it quicker and less expensive to obtain patents.

The real reforms our patent system needs, should address the speed and quality of patent examination. One way to do it is to create a two-tear patent system with junior patent application examined only for novelty and senior patent applications also examined for non-obviousness, as any patent application is examined today. A junior patent (such as Australian Petty Patent, German Gebrauch Patent or Utility Model adapted in most other countries) would have shorter terms and lower filing fees so that many inventors and cash-strapped small business can avail themselves of this form of protection. While a determination of non-obviousness requires a subjective human judgment that only a qualified patent examiner can make, the examination for novelty can and should be computerized. Advances in artificial intelligence in general and semantic search in particular makes it possible. Anybody who doubts it should watch IBM Watson computer win hands down against best human players Jeopardy game last week. Machine-based examination of junior patent application will free off examiners to focus on senior patents. This will speed up the examination process and assure higher quality of issued senior patents.

Patents are critical to encouraging innovation by enabling inventors to keep the fruits of their labor. They are also the primary drivers of job creation in the U.S. The Senate should reject these harmful changes to the U.S. patent system.

Alexander I. Poltorak is the founder and chief executive officer of General Patent Corporation (GPC), an intellectual property (IP) management company focusing on patent licensing and enforcement, IP strategy and valuation. He also founded and serves as President of American Innovators for Patent Reform (AIPR), a nonprofit organization dedicated to strengthening the U.S. patent system.

It is not complicated. The constitution states "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." It does not say first to apply. In the few cases that it maters, it is also very important. If somebody where to patent the idea of another, the new law states the force of law will be on the side of the thief. Theft of ideas is very hard to prove, so why not steal. The US in the past has been the stop to this misbehavior, not any more. Steal all you want, now it is legal. Maybe you need to have the experience to understand.

Cont'd: Not only that, but out of about several thousand applications filed last year, only about 10 or 11 applications made use of Interference Proceedings, where an applicant gets to prove a date of invention that is earlier than his filing date. Of those proceedings, the independent inventor won only once, I believe. So, switching to a first to file system would have hurt only one (1) independent inventor. Big corporations usually win in either: a first to invent system (the U.S.); or, in a first to file system (everywhere else). It makes no difference either way; a big corporation wins regardless because they will always have more resources (legal, technical, etc.) than an individual does.
The article overlooks the fact that changing to a first to file system would eliminate a need for time consuming Interference hearings at the USPTO, which would free up government personnel to do other things, like eliminate the backlog.
The government has spent a lot of time researching and accessing the potential impact that these proposed rule changes will have on the economy; if these newly proposed rules were likely to hurt the economy, then they would have not been proposed in the first place. Give the government a break, it is not run by idiots.

I've already said this in a reply to someone's comment, but I will repeat it here in case you missed it:
The author of this article seems to imply that small inventors will somehow be disadvantaged by the proposed changes to the laws, but his worst case scenarios as to what might happen seem to be based on his own opinions, not on any type of study, scientific or otherwise. This article is designed to appeal to your emotions instead of your intellect.
For example, he asserts that if the U.S. changes to a "first to file" system, then that will create a rush to the patent office, which will produce lower quality applications, and ultimately hurt small inventors. However, studies by the USPTO did not find that countries with a first to file system had lower quality applications than the U.S. did.

The author seems to imply that small inventors will somehow be disadvantaged by the proposed changes to the laws, but his worst case scenarios as to what might happen are biased on his own opinions, it seems, not on any type of study, scientific or otherwise. This article is designed to appeal to your emotions instead of your intellect.
For example, he asserts that if the U.S. changes to a "first to file" system, then that will create a rush to the patent office, which will produce lower quality applications, and ultimately hurt small inventors. However, studies by the USPTO did not find that countries with a first to file system had lower quality applications than the U.S. did.
Not only that, but out of about several thousand applications filed last year, only about 10 or 11 applications made use of Interference Proceedings, where an applicant gets to prove a date of invention that is earlier than his filing date. Of those proceedings, the independent inventor won only once, I believe. So, switching to a first to file system would have hurt only one (1) independent inventor. Big corporations usually win in either: a first to invent system (the U.S.); or, in a first to file system (everywhere else). It makes no difference either way; a big corporation wins regardless because they will always have more resources (legal, technical, etc.) than an individual does.
The article overlooks the fact that changing to a first to file system would eliminate a need for time consuming Interferences hearings at the USPTO, which would free up government personnel to do other things, like eliminate the backlog.
The government has spent a lot of time researching and accessing the potential impact that these proposed rule changes will have on the economy; if these newly proposed rules were likely to hurt the economy, then they would have not been proposed in the first place. Give the government a break, it is not run by idiots.

You're right, most real and worthwhile patents come from small companies and sole inventors. Most of the patents from the larger inventors are designed to exclude other players from the market by being overly broad.

Here we go again.
The United States has one of the best patent systems as people all over the world come here to register their patents . A patent was created so that somebody could invent something
patent it, then licesence it or sell it and have a gain. NOW big business wants to hire there
corrupt politicians to pass a bill the forbids a small inventor from going thru the system and after even suing getting paid . Well you politicians have sold out every industry in the USA , we manufacture less and less here . We were hopeful to have a thriving IP , Patent system in the United States but we can now count on our politicians selling that out too . We are done with no chance if a patent bill gets passed that takes away the patent from the small inventor , which is what this patent bill does . The real word starts with an "F" . Our politicians suck .

"Patents are critical to encouraging innovation by enabling inventors to keep the fruits of their labor."
I would question that statement and thus the resulting consequences. For example looking at the mobile phone industry today it simply stops new companies from entering into the market. Practically it only enables the companies big enough to set the standards to keep competition out and prices up. And the fairytale that jobs are created is just as stupid. These companies produce in China, protected by American Patents.

Even better, make it very expensive to hold too many patents.
eg x = v * n(n+1)/2 where v = the base patent cost.
Lets say v = $100
1 Patent = $100/annum to maintain
2 Patents = $300/annum to maintain
10 Patents = $5.5k/annum to maintain
100 Patents = $500k/annum to maintain
1000 Patents = $50M/annum to maintain
This would force very large companies / trolls to only keep their best patents and toss out the dross polluting the patent system.
You would need rules to stop companies spawning sub related companies to get around the intent.

I like the idea of it being size related, and I strongly support your view that you must actively use a patent to keep it. There should be a grace period for development of product, but essentially you are correct. The only thing I would say is that unintentional infringement should only not be punishable if reasonable steps are taken to desist. You probably meant that but it's unclear. And yes, scrap damned obvious patents which would account for 90% of them.
Finally, I'm sure you agree that patenting DNA sequences that occur naturally should not be allowed (prior art :-) )

Patents were originally conceived to bring proprietary information to the public realm and protect sole inventors having their ideas stolen by corporations.
The opposite now happens, because corporations file patents like confetti. Companies now specialize in buying pools of patents, not to develop technology or better society, but to sue anyone who may happen onto the broad ideas expressed in those patents.
I strongly believe:- patent owners must be commercially utilizing their patent to keep it: patent application / renewal fees be based on the size of the entity: software and business process should not be patentable (ie 1 click): patent submarining / trolling be illegal : accidental infringement be non punishable : the bar for novelty to receive a patent be way higher than it is now.